Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.
Interpretation
The quote suggests that investing in the stock market rewards those who are patient over those who are constantly trading.
Warren Buffett's quote emphasizes the belief that the stock market functions as a mechanism where wealth is redistributed from those who are impatient and frequently buy and sell their investments, to those who adopt a long-term perspective and hold onto their investments patiently. It suggests that those who remain steadfast and avoid impulsive decisions typically achieve better financial outcomes over time.
In practice
During a finance seminar to illustrate long-term investing principles.
I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot - and it's a lot - it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.
If the world couldn't see your results, would you rather be thought of as the world's greatest investor but in reality have the world's worst record? Or be thought of as the world's worst investor when you were actually the best?
Cash never makes us happy, but it's better to have the money burning a hole in Berkshire's pocket than resting comfortably in someone else's.
I think you should read everything you can. In my case, by the age of 10, I'd read every book in the Omaha public library about investing, some twice. _x000D_ You need to fill your mind with various competing thoughts and decide which make sense.
The most common cause of low prices is pessimism - some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces. It's optimism that is the enemy of the rational buyer.
Oneβs objective should be to get it right, get it quick, get it out and get it over. Your problem wonβt improve with age.
All the math you need in the stock market you get in the fourth grade.
Long-term investing has gotten so popular, it's easier to admit you're a crack addict than to admit you're a short-term investor.
A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.
Assets put money in your pocket, whether you work or not, and liabilities take money from your pocket.
When growth is slower-than-expected, stocks go down. When inflation is higher-than-expected, bonds go down. When inflation is lower-than-expected, bonds go up.
If the fluctuations in your investment portfolio are reduced, the impact of emotions and behavior on your account is also reduced.
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